UK financial leaders shift support to Labour – report

New research indicates a significant shift in the political inclination of UK financial leaders, with 55% expressing their intention to vote for the Labour party in the upcoming general election. This survey, conducted by payments solutions provider Equals Money, involved 400 senior financial decision-makers from UK businesses with over 250 employees.

The study revealed that 91% of respondents had decided on their preferred party. A substantial 56% of the surveyed financial leaders believe that a Labour victory would positively impact their businesses, contrasting with only 26% who felt it would have a negative impact. In comparison, 45% of the respondents indicated that a Conservative win would be detrimental to their operations, while 37% shared concerns about the Reform party's potential impact.

The speculative nature of the election has led 39% of the businesses surveyed to engage in currency hedging as a protective measure against potential economic repercussions following the result. Thanim Islam, Head of FX Analysis at Equals Money, commented on this trend, saying, "Financial leaders cannot guarantee the future, but they can do things to manage costs. By locking in current rates ahead of any major currency value swings the election may cause, it makes it much easier to predict the costs of doing business, especially overseas."

Investment and business growth strategies are expected to undergo changes contingent on the election outcome, with 80% of UK businesses planning adjustments. Despite the possible disruptions, a substantial 88% of firms remain confident in their plans for international expansion. The key considerations when selecting new markets include economic stability (61%), market size (54%), and the value of local currency (41%).

The survey also highlighted several challenges that businesses face when expanding internationally. A significant 31% cited existing competition in international markets as a primary concern, while 27% were worried about a lack of brand awareness. Issues related to the payments process were frequently mentioned, including the costs of using foreign currency and slow cross-border payments, which were concerns for 29% and 27% of respondents, respectively.

To bolster confidence in their international growth strategies, businesses outlined several support needs. Working with a trusted partner was mentioned by 53% of respondents, while 47% sought guidance on international compliance, and 44% identified a need for international investment. Additionally, 39% indicated that a cost-effective foreign exchange (FX) provider would enhance their confidence in these plans.

Thanim Islam emphasised the value of external support in navigating the complex international business landscape. "The power of third-party help is undeniable in the face of an unpredictable economic future and expanding internationally, so businesses shouldn't be afraid to reach out. Finance teams need to have a leading role from the beginning of any international growth plans, as cross-border payments will be some of the greatest challenges businesses face. Having a trusted partner to support with foreign exchange rates and handling multiple currencies takes a huge burden off of internal finance teams, freeing them up to focus on the wider expansion strategy and managing any unexpected hurdles."

The survey conducted by Equals Money and 3Gem in June 2024 provides a snapshot of the current political and economic sentiment among UK financial leaders as they navigate the complex landscape leading up to the general election. These insights could prove instrumental in understanding the broader economic implications of potential election outcomes.